1. Field of the Invention
The invention generally relates to the field of finance and, more particularly, to a system and method for trading in the appreciation of real estate both (a) with the purchaser or owner of the real estate in return for funds towards a down payment or to take cash out of equity in a property through a refinancing and (b) in a market for rights to the appreciation.
2. Description of the Related Art
In the purchase of residential real estate, single family homes, condominiums and cooperative apartments, it is well known that the greatest hurdle for first time buyers is the down payment. Thus, buyers able to carry a mortgage, pay real estate taxes, and/or pay common charges, may have to wait several years while they save a down payment. During this period of time the property in which they are interested may, and usually does, appreciate in value. However, these buyers cannot participate in this appreciation unless they can get a loan to cover the down payment. However, some financial institutions will not issue a mortgage where the buyer has to borrow the down payment. In addition, the payments on the loan for the down payment put a strain on the finances of the buyer. Thus, it would be beneficial to first time buyers, or buyers with limited sums available for down payments, if they could trade something of value for the down payment, and not have to repay the down payment through current payments of principal and interest or some balloon payment at a fixed point in time.
Current owners of homes and condos may wish to cash in on some of the appreciation they have experienced while still remaining in their properties. It would be beneficial for such owners to recover some of this appreciation by sharing their future appreciation without incurring additional monthly payments or adding loans to their credit status.
Real estate speculators purchase properties in a rising market, not to live in the residence, but to resell it for a profit in a short period of time. However, the amount of property that can be invested in is limited by the speculator's available capital. Further, the speculator must risk his investment in particular pieces of property which may not appreciate, even in a rising market. It would be beneficial to the speculator if he could spread his risk over a number of pieces of property and share the risk with others. Currently such investors have to take on the burdens of ownership and managing the rental of their property; a particularly burdensome process, particularly for overseas investors who may wish to leverage their currently strong currency.